How do I build a house for my NPCs?

I read on the wiki that people will move in under the following conditions:

You do something to please them
An empty house is available with a light source, table, and chair (also with walls).

I have a house which is about 7x8, then a roof space above that; about half the area. I could put furniture up there too, but will anyone move in?

Houses need to fulfill a set of requirements to be considered a proper house. The step-by-step guide to making a house is as follows:

The room must be at least approximately 42 blocks away from any corruption.
Build the walls and roof. The room must be five tiles tall at the least, not counting the roof itself.
The floor cannot be only wood platform, there must be a place for the NPC to stand without him standing on wood platforms. Make sure the room is big enough to be considered a proper house as well.
Fill in the house with background walls. Any player-placed wall will work.
Place a light source inside the room. A torch on the wall works fine, but you can also use candles and other such fancy items. You can make said fancy decorations with metals at an anvil.
Place at least one "Comfort Item"(chair) and a "Flat Surface Item"(table) in the house.
Place a Door in the house, in one of the walls.

Assuming you've done everything right, the game should treat your room as a house. The first house you build will be taken by the Guide, and any further houses by whichever NPCs appear.

There is also a size limit (60-750 tiles including walls, floor and ceiling), and the first house you build will always go to the guide.

It has to to be 6 blocks tall and 7 blocks wide. It needs to be made from wood. It also needs to at least one chair, one table, a torch, and a wood floor.

NOW REMEMBER - You have to unlock all the NPC's. The Guide is the only one that's free. If he never moves in the house then just wait, it takes time. Leave the house for a while. Later, when you come back he will be in the house.

How to unlock NPC's

Guns Dealer : Carry a gun in your inventory.
Mechanic - You can find her in the Dungeon, just make sure to kill Skeletron before entering.
Merchant - I think you need at least 50 silver coins.
Demolitionist - You need at least one bomb in your inventory and the Merchant.
Nurse - You need to have used at least one life crystal.
Goblin Tinkerer - After you defeat the Goblin Army look on the map, then head to where he's at. When you first see him he will be called the Bound Goblin. Tap (or click) on him and he will begin talking to you. Then make the house.
Dryad - Defeat a boss, King Slime doesn't count.
Santa Claus - It has to be somewhere around Christmas.
Party Girl - Has a fairly rare chance to spawn after having eight NPC's. Also, make sure that the chat doesn't say (NPC's name) needs to settle down or she won't spawn.
Truffle - Only spawns in Hardmode (activated after the defeating the Wall of Flash). Not only that, he can only spawn in player made surface glowing mushroom biome.
Pirate - Only spawns in Hardmode. Is unlocked after defeating the Pirate Invasion.
Wizard - Rare spawn underground after Hardmode is activated. There are some more but it will take lots of explaining.